Assent Compliance - Webinar Conflict Minerals

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ASSENTCOMPLIANCE

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RAPE FREE: ConfliCt Minerals

regulations in Canada and the u.s.

assent compliance

Krystal Noseworthy-BaKer phone: 613.882.1429

krystal.baker@assentcompliance.com

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ASSENTCOMPLIANCE

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INTROduCTION TO ASSENT COMPLIANCEassent compliance

•Consulting•GlobalRequirements•ComplianceStrategies•RegulatoryInterpretationsandImpacts

•IT•CloudComputing•ApplicationDesign

•Operations•ProgramImplementation•DataManagement

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ASSENTCOMPLIANCE

AgENdA•USConflictMineralsRegulation

•Overview

•Intent

•Scope

•Requirements

•FurtherSpecifics

•StepstoCompliance

•Timelines

•AssentSoftwareConflictMineralsModuleDemo

•Q&A

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ASSENTCOMPLIANCE

SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTthe united states conflict minerals actA “Sexy” Law•ConflictMineralsDefinition:

•Minedinconditionsofarmedconflictandatrociousabusesofhumanrights•Asper17CFRParts229and249“TheConflictMinerals”Rule:

“It is the sense of the Congress that the exploitation and trade of conflict minerals originating in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual- and gender-based violence, and contributing to an emergency humanitarian situation therein”

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ASSENTCOMPLIANCE

•DemocraticRepublicofCongo•CongoleseNationalArmy•ArmedRebelGroups•DemocraticForcesfortheliberationofRwanda

•Thissituationattractsattention•ChildSoldiers•Womenbeingrapedonamassscale

» Intimidatesandcontrolslocalpopulations» SecuresMINES,tradingroutes,andotherstrategicareas

•Moreattention=PoliticalCenterStage

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ASSENTCOMPLIANCE

SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTthe united states conflict minerals act - overviewJuly 21st, 2010•LegislationEnacted

•SEC•Disclosuresonuseofspecificconflictminerals

•3TGs»Tantalum(ColtanOre)»Tin(CassiteriteOre)»Tungsten(Wolframite)»Gold»Others determined by the Secretary of State to be financingconflictinDRC

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ASSENTCOMPLIANCE

•DemocraticRepublicofCongoandadjoiningcountries»DRC»CentralAfricaRepublic» Sudan»Zambia» Angola»CongoRepublic»Tanzania» Burundi»Rwanda»Uganda

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SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTintent

•To try to curb the “extreme” violence and exploitation in theDRCandneighboringcountries

•Exposecompaniesthatusemineralsderivedfromthisregion

•Disclosure

•PublicPressure

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ASSENTCOMPLIANCE

SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTscope•CompaniesthatregisterwiththeSEC

•10K(US)•20F(Foreign)•40F(Canadian)

•Conflict Minerals “necessary to the functionality or production” of itsproductsmanufactured(orcontractedtobemanufactured)

•SupplierstoimpactedSECfilingcompanies•EveniftheyarenotanSECfilingcompanythemselves

Industries most heavily impacted:•ElectronicsandCommunications•Aerospace•Automotive

•Jewelry•Healthcaredevices•DiversifiedIndustrialManufacturing

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ASSENTCOMPLIANCE

SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTrequirementsAs part of annual reporting to SEC:

•Reasonablecountryoforigininquiry»Originofconflictmineralsinproducts

•IfdidnotoriginateinDRCCountries»Disclosethedetermination»Disclosetheprocess»DeterminationontheInternetwebsite»Disclosethattheinformationisavailableonitswebsite»Disclosetheinternetaddressofthesite»Maintainrecordsoftheinvestigationanddetermination

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ASSENTCOMPLIANCE

•If originated inDRCCountries OR cannot conclude that conflictmineralsDIDNOToriginateintheDRCcountries

» Alltheabovetasksplus

•CreateConflictMineralsReport

» Exhibittoannualreport» AvailableontheInternetwebsite

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SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTconflict minerals report•Adescriptionofthemeasuresithadtakentoexerciseduediligenceonthesourceandchainofcustodyofitsconflictminerals,

•Has to include a certified independent private sector audit of theConflictMineralsReportthatidentifiestheauditorandisfurnishedaspartoftheConflictMineralsReport.

•Adescriptionoftheproductsmanufacturedorcontractedtobemanufac-turedcontainingconflictmineralsthatarenot“DRCconflictfree,”

•Thefacilitiesusedtoprocessthoseconflictminerals,

•Thoseconflictminerals’countryoforigin,

•Theefforts todetermine themineor locationoforiginwith thegreatestpossiblespecificity.

•RequiredtoexerciseduediligenceinmakingthesedeterminationsintheConflictMineralsReport.

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SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTrequirements – further specifics•ContractManufacturing–ProvisionApplies

•Metalisnotfoundinthefinalproduct–Provisionappliesaslongasitis“necessary”inthemanufacturingprocess

•OrganisationforEconomicCooperationandDevelopment(the“OECD”)hasdevelopedduediligenceguidanceforconflictmineralsupplychains.

•TheGAOGovernmentAuditingStandardsandothersimilardomesticandinternational standards shouldbeusedas reference/to set thebar for theindependentaudit

•Reportingrequirementsarenotfullyspecified,theyareexpectedtoevolveovertime

•Inclusionofmoreminerals•Levelsofduediligence

•Naturallyoccurringtraceamountsexempt•Unintentionallyincludedtraceamountsexempt

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ASSENTCOMPLIANCE

SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACT3 steps to complianceTheConflictMineralProvision requires that companieswho registerwiththeSECusethefollowing3stepstocomply:

Step 1 – Scope determination•WhichofyourproductsareinscopeoftheConflictMineralprovision:

•ThedefinitionstatesthatcompaniesmustprovidedisclosureundertheConflictMineralProvisionif“...conflictmineralsarenecessarytothefunctionalityorproductionofaproductmanufactured...”

•Ifyourproductsdorequireconflictminerals,movetoStep2.

Step 2 – Reasonable Country of Origin Inquiry •Definedaswhata“Reasonablepersonwouldconsideraprudentcountryoforigininquiry”.

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ASSENTCOMPLIANCE

•IfyoucandeterminethatyourconflictmineralsdoNOTcomefromDRCoradjoiningcountriesthenyoudisclosethisdeterminationtotheSECalongwiththereasonablecountryoforigininquiryusedtomakethisdeterminationintheannualreport.

•Thisinformationmustalsobeprovidedonthecompany’swebsite.

•If your products do use conflict minerals from the DRC/adjoiningcountries or youDONOTKNOW, youmustmove on to Step 3 andprovideaConflictMineralReport.

Step 3 – Conflict Minerals Report•CompaniessubmittingaConflictMineralsReportmust

•ExerciseduediligenceindeterminingthesourceandchainofcustodyofConflictMinerals

•Certifythata3rdpartyauditoftheReportwasobtained•ListproductsthatarenotDRCfree•Listfacilitiesusedtoprocessthoseconflictminerals•DetailtheCountryoforigin•Showeffortstodetermineorlocatemineoforiginwithgreatestspecificity

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SECTION 1502 – dOdd-FRANk WALL STREET REFORM ANd CONSuMER PROTECTION ACTtimelines•StillwaitingonfinalruletobepassedbySEC–ithasbeendelayedafewtimesbutisexpectedtopassinthefourthquarterofthisyear.

•Firstreportingperiod:•Firstfullfiscalyear(firstfiling)ending12monthsafterthefinalruling

•Therecanbe5-10Layersbetweenthemineandtheendproduct•Applehas125suppliersusingTinandtheysourcefrom43smeltersaroundtheworld

»Reasonableinquirythroughoutthissupplychaincantakemonths!

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ASSENTCOMPLIANCE

•Becauseofthesupplychaininvestigationcomplexitymanycompanieshavealreadystartedtheprocess

•Apple•Intel•Motorola•Nokia•Microsoft•Acer•RIM•Philips•Toshiba•SanDisk•LG

»Thissortof“bigbusiness”pressurewillonlyenhancethecoveragethisgetsandwillspeedthenecessityofcompliancethroughoutsupplychains

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ASSENTCOMPLIANCE

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